LETTER: We can’t trust NJ to run a state bank

Without much fanfare, Bill S885 was introduced by state Sens. Richard Codey and Nia Gill to create a state-owned and state-operated bank governed by a 13-member board. Its purpose is to promote small businesses, provide loans for housing infrastructure and receive deposits from public sources such as municipalities, among other services.

Our local community banks are responsible for conducting these exact services and, according to the Federal Financial Institutions Examination Council, all but five do it very well, as they are reviewed and examined by federal regulators on a consistent basis. Through the Community Reinvestment Act, local banks have to ensure that they are meeting the small business (including small farm) credit needs of the community, including low- and moderate-income neighborhoods, consistent with safe and sound banking.

Safe and sound banking is critical with any financial institution. Can we ensure monies controlled by political hacks and appointees from the state are safe and their practices sound?

Lending decisions should never be based on politics. Can we also ensure that state monies will remain in New Jersey and not offshore for foreign investment? Local banks keep their money in the community.

Our new governor, Phil Murphy, originated this state-owned and state-operated bank idea following the lead of North Dakota in 1919, which has the only remaining state-run bank in the U.S. (Note that all the rest failed.) The bank was created for agricultural purposes. We don’t have such a need in New Jersey. Operating and running a bank is no simple feat. Has our state demonstrated its ability to run sophisticated and complex departments efficiently and effectively?

In recent years, large banks received bailouts by the federal government. A state-run bank would require significant capital and resources to start up as well as face many challenges. As taxpayers of a state with hefty taxes, do we want to bail out our friends in Trenton if our state bank fails?

New Jersey local community banks are run efficiently and effectively, and are meeting the credit and deposit needs of communities, according to FDIC data. Why would we as taxpayers want to jeopardize their existence for one large state bank that would offer little benefit.